U.S. Markets close in 2 hrs 26 mins

Here’s What Hedge Funds Think About Qualys Inc (QLYS)

Reymerlyn Martin

Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Is Qualys Inc (NASDAQ:QLYS) ready to rally soon? Prominent investors are selling. The number of bullish hedge fund bets decreased by 3 lately. Our calculations also showed that QLYS isn't among the 30 most popular stocks among hedge funds. QLYS was in 14 hedge funds' portfolios at the end of the first quarter of 2019. There were 17 hedge funds in our database with QLYS positions at the end of the previous quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

John Overdeck of Two Sigma

Let's take a peek at the fresh hedge fund action regarding Qualys Inc (NASDAQ:QLYS).

Hedge fund activity in Qualys Inc (NASDAQ:QLYS)

At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in QLYS over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

QLYS_jun2019

More specifically, Renaissance Technologies was the largest shareholder of Qualys Inc (NASDAQ:QLYS), with a stake worth $52 million reported as of the end of March. Trailing Renaissance Technologies was Alkeon Capital Management, which amassed a stake valued at $41.7 million. AQR Capital Management, Gotham Asset Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Because Qualys Inc (NASDAQ:QLYS) has experienced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few hedge funds who were dropping their full holdings in the third quarter. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management dropped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, valued at about $0.9 million in stock, and George McCabe's Portolan Capital Management was right behind this move, as the fund said goodbye to about $0.7 million worth. These transactions are important to note, as total hedge fund interest dropped by 3 funds in the third quarter.

Let's go over hedge fund activity in other stocks similar to Qualys Inc (NASDAQ:QLYS). These stocks are Allegheny Technologies Incorporated (NYSE:ATI), AutoNation, Inc. (NYSE:AN), Wolverine World Wide, Inc. (NYSE:WWW), and Green Dot Corporation (NYSE:GDOT). This group of stocks' market caps resemble QLYS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATI,25,209165,1 AN,21,458504,-1 WWW,19,124564,7 GDOT,27,233849,8 Average,23,256521,3.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $257 million. That figure was $145 million in QLYS's case. Green Dot Corporation (NYSE:GDOT) is the most popular stock in this table. On the other hand Wolverine World Wide, Inc. (NYSE:WWW) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Qualys Inc (NASDAQ:QLYS) is even less popular than WWW. Hedge funds clearly dropped the ball on QLYS as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on QLYS as the stock returned 7.5% during the same period and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content

  • Don’t Buy Iren SpA (BIT:IRE) Until You Understand Its ROCE
    Business
    Simply Wall St.

    Don’t Buy Iren SpA (BIT:IRE) Until You Understand Its ROCE

    Today we are going to look at Iren SpA (BIT:IRE) to see whether it might be an attractive investment prospect. Specifically, we'll consider its Return On Capital Employed (ROCE), since that will give us an insight into how efficiently the business can generate profits from the capital it requires. Firstly, we'll go over how we calculate ROCE.

  • Intrepid Potash (NYSE:IPI) Seems To Use Debt Quite Sensibly
    Business
    Simply Wall St.

    Intrepid Potash (NYSE:IPI) Seems To Use Debt Quite Sensibly

    Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price.

  • Congress group pens letter to American, mechanics unions over 2 issues
    Business
    American City Business Journals

    Congress group pens letter to American, mechanics unions over 2 issues

    More than two dozen members of Congress signed a letter to American Airlines and the unions which represent its mechanics as the two sides remain without a new contract. The letter was signed by 27 New York and New Jersey representatives. American Airlines Group, Inc. (Nasdaq: AAL) employs more than 2,000 employees at three of New York City's main airports: LaGuardia, John F. Kennedy and Newark Liberty, the group said.

  • Are Investors Undervaluing Publicis Groupe S.A. (EPA:PUB) By 43%?
    Business
    Simply Wall St.

    Are Investors Undervaluing Publicis Groupe S.A. (EPA:PUB) By 43%?

    Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Publicis Groupe S.A. (EPA:PUB) as an investment opportunity by taking the expected future cash flows and discounting them to their present value. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.

  • Warren Buffett's Portfolio Yields a Big Surprise
    Business
    Motley Fool

    Warren Buffett's Portfolio Yields a Big Surprise

    Berkshire Hathaway's 13F filing yields some familiar buying Because of this overwhelming success, investors often look to Buffett for investment ideas and may even mirror his every move. That's what makes Berkshire Hathaway's 13F filing with the Securities and Exchange Commission (SEC) each quarter such an anticipated event. You see, investment firms that have more than $100 million in assets under management are required to file Form 13F with the SEC no later than 45 days after the end of the previous quarter.

  • Disney inflated revenue for years, whistleblower claims
    Business
    Yahoo Finance Video

    Disney inflated revenue for years, whistleblower claims

    Sandra Kuba, a former senior financial analyst who worked at the Walt Disney Company for 18 years, filed a series of whistleblower tips with the SEC, claiming Disney overstated its revenue for years. She's alleging that employees working in the parks-and-resorts business segment were able to systematically overstate revenue by billions of dollars by exploiting weaknesses in the company's accounting software.

  • Why Kohl's Stock Dropped 5% Today
    Business
    Motley Fool

    Why Kohl's Stock Dropped 5% Today

    What happened Today brings good news and bad news -- but mostly bad news -- for Kohl's (NYSE: KSS) stock shoppers. The stock is down 5.3% in noonday trading (EDT) after investors took a look at Q2 earnings results released this morning and declared them "mixed." On the plus side, Kohl's beat estimates for the quarter, reporting profits of $1.51 per diluted share and pro forma profits of $1.55.

  • Sarepta's FDA rejection could have ripple effect in other Duchenne biotechs
    Business
    American City Business Journals

    Sarepta's FDA rejection could have ripple effect in other Duchenne biotechs

    In a surprise decision Monday, the U.S. Food and Drug Administration rejected Sarepta Therapeutics' second drug for the rare disease Duchenne muscular dystrophy. But beyond being a setback for the Cambridge-based drugmaker, analysts say the rejection could have a ripple effect far outside of the walls of Sarepta's headquarters. Sarepta (Nasdaq: SRPT) had hoped to launch a new treatment for some patients with the genetic disease due to a certain genetic mutation.

  • 3 Top Growth Stocks to Buy Right Now
    Business
    Motley Fool

    3 Top Growth Stocks to Buy Right Now

    A growth story gaining traction Daniel Miller (Carvana): Carvana, a rapidly expanding used-car retailer, is a top growth stock currently firing on all cylinders, and Wall Street has taken notice. The stock has more than doubled in 2019, is up roughly 480% since my article mentioning it as a stock you can't afford to miss, and is up nearly 600% since it went public two years ago. Let's cover some of its impressive growth metrics, and also the risks that come with owning the stock.

  • 2 Cannabis Stocks That Absolutely Crushed It in the Second Quarter
    Business
    Motley Fool

    2 Cannabis Stocks That Absolutely Crushed It in the Second Quarter

    On one hand, the marijuana industry is primed for once-in-a-generation-type growth. After the industry logged worldwide sales of just over $3 billion in 2014, estimates suggest that annual legal cannabis revenue could hit $50 billion to $200 billion by the end of the next decade. On the other hand, the cannabis industry hasn't had time to mature, and that's been reflected in the industry's early stage operating results.

  • Does Chesapeake Energy (NYSE:CHK) Have A Healthy Balance Sheet?
    Business
    Simply Wall St.

    Does Chesapeake Energy (NYSE:CHK) Have A Healthy Balance Sheet?

    Net debt is about the same, since the it doesn't have much cash. How Healthy Is Chesapeake Energy's Balance Sheet? Zooming in on the latest balance sheet data, we can see that Chesapeake Energy had liabilities of US$2.22b due within 12 months and liabilities of US$10.1b due beyond that.

  • Will AMD or Intel Gain Mobile and Server Market Share?
    Business
    Market Realist

    Will AMD or Intel Gain Mobile and Server Market Share?

    Investors are betting on AMD's mobile and server CPU market share gain from Intel (INTC). On the other hand, traders are betting on its new CPU (central processing unit) and GPU (graphics processing unit) launches. AMD and Intel are the only two players in the x86 CPU market.

  • Beyond Meat stock surges amid analyst endorsement
    Business
    Yahoo Finance Video

    Beyond Meat stock surges amid analyst endorsement

    Beyond Meat shares are on the rise. This comes after J.P. Morgan analyst Ken Goldman, upgraded the company's stock to overweight from neutral — raising his price target by one dollar to $189 dollars. Yahoo Finance's Adam Shapiro, Rick Newman and Heidi Chung discuss with Direxion Managing Director, and Head of Product, Dave Mazza.

  • Canopy Growth Fired Him -- but Here's Why Bruce Linton Just Bought More Shares Anyway
    Business
    Motley Fool

    Canopy Growth Fired Him -- but Here's Why Bruce Linton Just Bought More Shares Anyway

    If Bruce Linton has any hard feelings about how he was dumped by Canopy Growth (NYSE: CGC), he's not showing it. Instead, Linton told BNN Bloomberg via email that he was buying even more shares of Canopy to add to his already large position. Canopy Growth posted revenue that was much lower than anyone expected in its fiscal first quarter.

  • Why Sea Stock Plunged Today
    Business
    Motley Fool

    Why Sea Stock Plunged Today

    What happened Shares of Sea Limited (NYSE: SE) have plunged today, down by 8% as of 12:25 p.m. EDT, after the company reported second-quarter earnings. Losses widened, but the Singapore-based digital platform specialist raised its guidance for 2019.

  • Is Tupperware Brands (NYSE:TUP) A Risky Investment?
    Business
    Simply Wall St.

    Is Tupperware Brands (NYSE:TUP) A Risky Investment?

    The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin.

  • Pfizer (NYSE:PFE) Shareholders Have Enjoyed A 20% Share Price Gain
    Business
    Simply Wall St.

    Pfizer (NYSE:PFE) Shareholders Have Enjoyed A 20% Share Price Gain

    One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement. During five years of share price growth, Pfizer achieved compound earnings per share (EPS) growth of 6.6% per year. This EPS growth is higher than the 3.7% average annual increase in the share price.

  • Is MongoDB (NASDAQ:MDB) Using Debt Sensibly?
    Business
    Simply Wall St.

    Is MongoDB (NASDAQ:MDB) Using Debt Sensibly?

    Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Of course, the upside of debt is that it often represents cheap capital, especially when it replaces dilution in a company with the ability to reinvest at high rates of return.

  • Is Weyerhaeuser Company (NYSE:WY) Potentially Undervalued?
    Business
    Simply Wall St.

    Is Weyerhaeuser Company (NYSE:WY) Potentially Undervalued?

    This means that the opportunity to buy Weyerhaeuser at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Weyerhaeuser's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future.

  • Better CBD Stock: Charlotte's Web vs. CV Sciences
    Business
    Motley Fool

    Better CBD Stock: Charlotte's Web vs. CV Sciences

    Charlotte's Web (OTC: CWBHF) and CV Sciences (OTC: CVSI) are both purveyors of cannabidiol (CBD) oil, and they've also been some of the most profitable cannabis-related operations in 2019. Charlotte's Web describes itself as the market leader in hemp-based CBD products, and it's quite possibly the most established brand in the industry. There were already hundreds of businesses processing hemp into high-margin CBD before the farm bill made it legal in every state, but that hasn't diminished the strength of the Charlotte's Web brand.

  • These 4 Measures Indicate That BP (LON:BP.) Is Using Debt Extensively
    Business
    Simply Wall St.

    These 4 Measures Indicate That BP (LON:BP.) Is Using Debt Extensively

    What we care about is avoiding the permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price.

  • Is YUM! Brands (NYSE:YUM) A Risky Investment?
    Business
    Simply Wall St.

    Is YUM! Brands (NYSE:YUM) A Risky Investment?

    Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. Importantly, YUM! Brands, Inc. (NYSE:YUM) does carry debt.

  • Does Noble Energy (NYSE:NBL) Have A Healthy Balance Sheet?
    Business
    Simply Wall St.

    Does Noble Energy (NYSE:NBL) Have A Healthy Balance Sheet?

    Importantly, Noble Energy, Inc. (NYSE:NBL) does carry debt. Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. What Is Noble Energy's Debt?

  • Is Fastly (NYSE:FSLY) Weighed On By Its Debt Load?
    Business
    Simply Wall St.

    Is Fastly (NYSE:FSLY) Weighed On By Its Debt Load?

    The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Fastly, Inc. (NYSE:FSLY) makes use of debt.

  • Yamana Gold (TSE:YRI) Use Of Debt Could Be Considered Risky
    Business
    Simply Wall St.

    Yamana Gold (TSE:YRI) Use Of Debt Could Be Considered Risky

    Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' When we think about how risky a company is, we always like to look at its use of debt, since debt overload can lead to ruin. As with many other companies Yamana Gold Inc. (TSE:YRI) makes use of debt. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing.